Ring tones make man millions
By JEFF SMITH
College dropout James Eberhard,
26, woke up a multimillionaire Wednesday.
And not by winning the lottery.
Rather, British-based Monstermob bought Eberhard's Denver cell-phone ring-tone
company, 9 Squared, for $3 million in cash, plus a potential $27 million to $46
million in stock subject to 9 Squared's performance later this year.
"It just blows me away," said Eberhard, who founded the company in 2001.
A ring tone, for the uninitiated, is the sound people hear when their cell phone
9 Squared is part of a fledgling industry that sells custom ring tones -- such
as snippets of popular songs or funny noises.
The Yankee Group, a Massachusetts-based technology-research firm, recently
estimated the size of the global ring-tone market at $2.5 billion a year. The
U.S. ring-tone business was only around $80 million last year, but is growing at
a feverish clip.
In addition, 9 Squared provides other "mobile content" such as phone games.
In all, 9 Squared has compiled a catalog of more than 6,000 pieces of mobile
content through negotiations with more than 275 music publishers, record labels,
game developers, image providers and film studios.
Its "RingTone JukeBox" and other brands are provided to such U.S. wireless
operators as Alltel, Verizon, U.S. Cellular and Cricket.
Ring tones typically can be bought and downloaded onto a phone for between 99
cents and $2, while a phone game costs between $3 and $8.
The primary demographic is teenagers to people in their late 20s, "but it's
extending pretty far outside of that," Eberhard said.
Products already had been started in Latin America and Asia, but 9 Squared,
Eberhard said, was looking for a partner that could bring in cash, experience
and an entry into the explosive Western European market.
Rival Monstermob, a larger provider of ring tones, phone games and other
cell-phone content, fit the bill.
"This solidifies our vision of being a worldwide mobile-content player,"
Monstermob Chief Executive Martin Higginson said in a statement: "This is a
further step in establishing Monstermob as the No. 1 mobile content provider
Eberhard said 9 Squared, which employs more than 20 people, will remain as a
largely independent entity based in Denver.
The company's name comes from his interest in math and science and the
"mathematical irregularity" that nine times any single digit will equal a number
whose digits add up to nine.
The idea was to "make technology easier, bring it back to square nine," he said.
Along the way, Eberhard, who most recently owned 56 percent of the company,
picked up University of Denver MBA graduates Brian Casazza and Ted Suh as
Verizon Wireless spokeswoman Jenny Weaver said it used to be that everyone would
scramble for his or her phone because all cell-phone rings sounded the same.
Today, custom ring tones "are extremely popular, a way for people to personalize
their wireless phones," Weaver said.
Eberhard said one of 9 Squared's skeptical attorneys bought into the trend when
he heard the theme from the TV show "Law and Order." The attorney immediately
asked, "Can you put that on my phone?"